Market Update July 14th - NDAX OTC
Markets
Canada BoC Interest Rate Decision $CAD
Actual: 5.00%
Expected: 5.00%
Previous: 4.75%
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According to the latest CPI report, headline inflation declined significantly in June, with energy prices being the primary driver. Year-on-year CPI inflation fell to 3%, the lowest level since March 2021, while core CPI inflation declined to 4.8%, the lowest level since November 2021. Despite the better-than-expected CPI report, the market's probability of a 25 basis point rate hike on July 26 to 5.25% to 5.50% barely moved, with the market strongly expecting a hike in two weeks. However, there is some bad news to temper the disinflation celebrations as businesses' unit cost inflation expectations picked up slightly in July and remain significantly above the Fed's 2% target. Overall, the latest CPI report suggests that inflationary pressures may be easing, but the Fed is likely to remain vigilant in its efforts to keep inflation under control.?
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Implied volatility coming into these events is far lower than a year ago, reflecting a market that is no longer as concerned about the effect of rate hikes on the price risk assets.?Bitcoin pulled back 1.21% and Ethereum pulled back 0.45% after the data release, with both assets staying above the key levels of 30K and 1800 respectively.?The string of economic surprises beating expectations has changed market sentiment which we can view using measures like the?VIX?and?implied volatility and positioning.?After a brief spike in implied vol Tuesday morning that took Bitcoin and Ethereum I.V. into the high 40’s we are now in the mid-thirties with ETH implied vol below Bitcoin for the first time in over a week.
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Disclaimer: This article is not intended to provide investment, legal, accounting, tax or any other advice and should not be relied on in that or any other regard. The information contained herein is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of cryptocurrencies or otherwise.